Fresh W’Bank, AfDB, IDB loans may raise Nigeria’s debt to N31.7tn

Conversations are currently underway about the loan offer.
In this file photo taken on February 6, 2019, David Malpass speaks after US President Donald Trump announced his candidacy to lead the World Bank during an event in the Roosevelt Room of the White Hou

In the coming months, fresh loan disbursements expected from the World Bank, the African Development Bank and the Islamic Development Bank could increase the total public debt stock of Nigeria to N31.699tn.

Currently, Nigeria expects around $1,844bn (N699.1bn at the official N379/$ exchange rate) from the three financial institutions, obtained by Sunday PUNCH from the Abuja Debt Management Office.

Sunday PUNCH announced on September 10, 2020, that, as published by the DMO, Nigeria's public debt stock grew to a total of N31.01tn at the end of June, suggesting that the country's debt increased by N18.89tn in the last five years under the President, Major General Muhammadu Buhari (retd),

The DMO disclosed in the study that the country was still awaiting additional disbursements from international financial institutions, a move that would raise Nigeria's debt further.

The debt office had said,
“The DMO expects the public debt stock to grow as the balance of the new domestic borrowing is raised and expected disbursements are made by the World Bank, African Development Bank and the Islamic Development Bank which were arranged to finance the 2020 budget.”

When the correspondent questioned the expected additional disbursements, the DMO explained in an emailed response that Nigeria was currently expecting a $1.5bn (N568.5bn at the official N379/$ exchange rate) loan from the World Bank.

It also reported that before the end of this year, a balance of $211.5 m (N80.16bn) was expected from the AfDB.

It was concluded that the $211.5m balance was part of the $500 m facilities that Nigeria applied for from the bank, as the AfDB had approved an initial $288.5m.

It was also learned that Nigeria also applied to the Islamic Development Bank for $133 million (N50.41 billion) as a budget support facility needed to resolve the challenges raised by the COVID-19 pandemic.

Conversations are currently underway about the loan offer.

In the response from the DMO, the debt office said,

“Nigeria applied for a facility in the sum of $1.5bn from the World Bank. The request is presently being appraised by the World Bank.

“Nigeria applied for a facility of $500m from the African Development Bank. An initial sum of $288.5m has been approved by the AfDB, while the balance is expected to be approved before the end of the year.

It added,
“Nigeria applied to the Islamic Development Bank for $113m as Budget Support Facility for Nigeria’s response to the challenges posed by COVID-19. Discussions are ongoing on the request.”

It, therefore, implies, on the basis of the above, that the total public debt of the country will increase by an additional N699.1bn in the coming months once the disbursements are made.

The total public debt stock of Nigeria comprises the Federal Government, the 36 states and the Federal Capital Territory debt stock.

The bulk of the debts were, however, contracted by the Federal Government.

Earlier this month, the Central Bank of Nigeria released some data showing that the Federal Government's debt portion of the country stood at N24.52tn as of March 31.

In the September 10 Sunday PUNCH article, the DMO stated that the debt had risen by N2.38tn within three months.

For the public debt stock of the country as of 30 June 2020, the DMO said,
“The data show that in naira terms, the total public debt stock which comprises the debt stock of the Federal Government, the 36 state governments and the FCT stood at N31.009tn or $85.897bn.”

Dr Muda Yusuf, Director-General of the Lagos Chamber of Commerce and Industry, told our correspondent that the debt situation was not unexpected.

This, he said, was focused on the devastating effect on sales and foreign exchange earnings of the fall in oil prices.